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Form 216: withholding for non-residents

How much to withhold from a non-resident, at what rate, whether form 216 is due with nothing withheld, and by when.

The rate depends on where the payee lives, not on the income.
To withhold and pay in
€19,000.00
Rate applied
19.00 %
Over-withheld
€11,400.00
Breakdown of the withholding and of the non-resident's own tax
Withholding basethe gross, article 31.2€100,000.00
Payer's withholding€19,000.00
Payee's tax baseless expenses, article 24.2€40,000.00
Payee's actual tax€7,600.00
Excess reclaimable on form 210€11,400.00
Net the payee receives€81,000.00
  • Article 31.3 says the person obliged to withhold «shall assume the obligation to pay the amount into the Treasury, and failure to comply with the former obligation shall not excuse them from the latter»: forgetting to withhold does not save the money.
  • Article 31.2 forbids the payer from deducting those expenses, even though the payee can deduct them in their own return. The excess is recovered on form 210, not here.
Adjustments: article 24.2 expenses and treaty rate

Personnel, materials and supplies on a job: they shrink the payee's tax and NOT the withholding.

1

The withholding base is not the tax base, and the act says so

Article 31.2 orders the withholding computed under the rules of the tax but «without taking into account articles 24.2, 24.6, 26 and 44». Article 24.2 is the base for services, technical assistance and installation or assembly work, which is the gross less personnel, materials incorporated and supplies. Article 24.6 is the deductible-expense rule for residents of the European Union or the European Economic Area. Both shrink the payee’s tax base and neither shrinks the withholding base, so the over-withholding is structural rather than anybody’s mistake. Article 16.1 of the regulation opens the refund for exactly that reason: «where a withholding or payment on account higher than the tax due has been borne, the excess may be reclaimed».

2

The rate is decided by where the payee lives, not by the income

Article 25.1.a) sets 24% generally and 19% «where the taxpayer is resident in another Member State of the European Union or of the European Economic Area with which there is effective exchange of tax information». Same invoice, same work, same payer: five points of difference turning on the supplier’s passport. The rest of the paragraph has its own rates: 19% for dividends, interest and capital gains under letter f), 8% for employment in Spanish diplomatic missions under letter c), 1.5% for reinsurance, 4% for shipping and airlines, and 2% for foreign seasonal workers.

3

A pension runs on a progressive scale, and its top rate beats the general one

Letter b) of the same paragraph is the only progressive scale in the whole tax without a permanent establishment, in an act whose hallmark is the flat rate: 8% up to 12,000 euros a year, 30% up to 18,700 and 40% above that. The 40% sits sixteen points above the general 24%. The act itself prints the accumulated tax at each threshold, 960 and 2,970 euros, so the table checks its own transcription. A 30,000-euro pension withholds 7,490, an average rate of 24.9667%.

4

Withholding and filing are two different questions, with four answers

Article 31.4.a) exempts from withholding the income exempt under article 14 or under a treaty «without prejudice to the obligation to file laid down in paragraph 5», and then opens two exceptions pointing opposite ways: letters k) and l) of article 14.1, which are dividends paid to European Union pension funds and to certain collective investment undertakings, ARE withheld although exempt, while letter d), the return on public debt, does not even require a filing. So there is income that is withheld and filed, income not withheld but filed, income neither withheld nor filed, and exempt income that is withheld anyway.

5

The nil return has six exceptions, and one of them is from 2024

The third paragraph of article 15.1 of the regulation makes a nil return compulsory «where income of the kind referred to in paragraph 4 of article 31 has been paid», and article 2.3 of Order EHA/3290/2008 carves six categories out of that, among them the return on non-resident accounts and interest on book-entry State debt. Order HAC/56/2024 of 25 January, with effect from 1 February 2024, narrowed the first of the six: previously all article 14.1.a) income was outside, and now in-kind employment income under article 42.3 of the Personal Income Tax Act is back in. Paying a non-resident employee an exempt nursery voucher now requires a nil 216 where before it required nothing at all.

6

The payer owes the Treasury even when nothing was withheld

Article 31.3 is literal: «Those obliged to withhold or to make a payment on account shall assume the obligation to pay the amount into the Treasury, and failure to comply with the former obligation shall not excuse them from the latter.» Forgetting the withholding does not save it. The payer pays it out of their own pocket, and recovering it from the payee is then a private matter between them. Article 15.4 of the regulation adds an obligation that is often forgotten: telling the payee the withholding practised at the moment of payment, stating the percentage applied.

7

The deadline, and the month the form’s own Order still prints

The general rule in article 15.1 of the regulation is the first twenty natural days of April, July, October and January, with the period becoming monthly for large companies. And here the two norms governing the same form disagree. Article 4 of Order EHA/3290/2008 still prints that «by way of exception, the return and payment for the month of July shall be made during the month of August and the first twenty natural days of the following September», but Royal Decree 960/2013 deleted that sentence from the regulation with effect from 1 January 2014, and the Order opens by saying its deadline is set «in accordance with article 15.1 of the Regulation». The tax agency’s own taxpayer calendar settles it against its own Order: a large company’s July form 216 appears «up to 20 August», and August’s «up to 21 September». On that same September page form 349 appears under «July and August»: two forms one company files in the same envelope, with opposite August rules.

8

And the scope of the monthly regime does not match either

Article 15.1 of the regulation refers to «paragraph 3.1 of article 71» of the VAT regulation, that is to the first number only, which is having exceeded 6,010,121.04 euros of turnover in the previous year. Article 4 of the Order refers to «numbers 1 and 2 of paragraph 3», and number 2 is having acquired a business where the combined turnover of acquirer and transferor exceeds that threshold, applying from the transfer itself. So a company that buys a business can be pushed onto monthly filing without ever having had six million of its own turnover. This tool applies the wider reading, the one in the Order that approves the form, because it is the reading that does not understate the reader’s obligation.

Worked example

A Spanish company commissions assembly work for 100,000 euros from a German engineering firm with no permanent establishment in Spain. Because it is resident in the European Union the rate is 19%, so the payer withholds 19,000 euros and hands over 81,000. The firm incurred 60,000 euros of personnel and materials, which article 24.2 does let it deduct: its taxable base is 40,000 euros and its tax 7,600. It has been over-withheld by 11,400 euros, and recovers them by filing form 210 under article 16.1 of the regulation. The payer cannot net them off, because article 31.2 expressly forbids it. Were the same firm American the rate would be 24% and the withholding 24,000 euros: five thousand more on identical work.

Frequently asked questions

Who files form 216?
The Spanish payer, not the payee. Article 31.1 of the consolidated act obliges entities resident in Spain to withhold, along with resident individuals carrying on an economic activity in respect of income they pay in the course of it, taxpayers of the tax itself in the cases it lists, and European Economic Area insurers operating here under freedom to provide services. Foreign diplomatic missions and consular offices in Spain are never obliged to withhold.
What amount is the withholding computed on?
On the gross. Article 31.2 orders the rules of the tax applied «without taking into account articles 24.2, 24.6, 26 and 44», and those are precisely the articles that allow expenses to be deducted. The payer cannot subtract the personnel or the materials of a job, even though the payee can do so in their own return. The refund under article 16.1 of the regulation comes out of that difference.
Is it 24% or 19%?
It depends on where the payee lives. Article 25.1.a) sets 24% generally and 19% for residents of another State of the European Union or the European Economic Area with which there is effective exchange of tax information. Dividends, interest and capital gains go at 19% under letter f) for any non-resident, without that distinction.
Does a double-tax treaty reduce the withholding?
It can reduce or remove it, and article 31.2 contemplates that by ordering the rules «laid down in an applicable double-tax treaty» applied. Each treaty sets its own caps by class of income, so there is no single rate: you have to look at the one for the payee’s country. What evidences the right is a certificate of tax residence issued by their administration, and without it the domestic rate applies.
Is the form due when nothing was withheld?
Sometimes yes, and this is the point most often missed. The third paragraph of article 15.1 of the regulation requires a nil return where income of the kind in paragraph 4 of article 31 was paid, that is exempt income on which no withholding was due. Article 2.3 of the Order carves six categories out of that. And if nothing at all was paid to a non-resident in the period there is no obligation whatsoever, which is a different thing from a nil return.
What changed in 2024 about the nil return?
Order HAC/56/2024 of 25 January, with effect from 1 February 2024, narrowed the first of the six carve-outs in article 2.3. Previously all article 14.1.a) income was outside it, and now in-kind employment income under article 42.3 of the Personal Income Tax Act is back in. Paying a non-resident employee an exempt in-kind benefit now requires a nil 216.
When is form 216 due?
In the first twenty natural days of April, July, October and January for the previous quarter, and in the first twenty days of each month for large companies. If the due date falls on a Saturday or a non-working day it moves to the next working day, as article 4 of the Order itself says. December’s period, and the fourth quarter, already fall due in January of the following year.
Is the July period extended into September?
No, and the discrepancy is worth knowing about. Article 4 of Order EHA/3290/2008 still prints that extension, but Royal Decree 960/2013 deleted it from article 15.1 of the regulation with effect from 1 January 2014, and it is from that article that the Order says it derives its deadline. The tax agency’s taxpayer calendar publishes a July form 216 «up to 20 August». Form 349, by contrast, does keep its extension and appears under «July and August».
And the annual summary?
That is form 296, and article 15.2 of the regulation makes it wider than the sum of the year’s 216s: the nominal list must also include those paid income «on which no withholding was practised» under paragraph 4 of article 31. It is filed from 1 to 31 January: that is now fixed by article 11 of Order EHA/3290/2008, which since 1 February 2024 no longer derives its deadline from article 15.2 of the regulation, where twenty days still stand.
What if the payer forgets to withhold?
They owe the money anyway. Article 31.3 says the person obliged to withhold «shall assume the obligation to pay the amount into the Treasury, and failure to comply with the former obligation shall not excuse them from the latter». The amount comes out of the payer’s own pocket and claiming it back from the payee is a private matter between them. Article 15.3 also requires a certificate of the withholdings practised to be issued to the payee, which is what lets them evidence it.

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Author: Thorben Rasmus Idel · Reviewed by: Nahar Geva · Last reviewed: